Video 6:16
Jay Weatherill

Jay Weatherill says he wants to have "serious discussions" with Holden after the company announced it will lay off 500 workers in Adelaide.

Transcript

LEIGH SALES, PRESENTER: 500 workers at the Holden car company are about to lose their jobs in another round of cost cutting in the car industry.

Today, Holden announced that the high Australian dollar was forcing it to cut its car production by almost a quarter.

Over the past 12 years, Holden has received more than $2 billion in government handouts. The most recent was a $300 million injection by the Federal and South Australian governments just last year.

The South Australian Premier Jay Weatherill is furious at today's development and he joins me now from Adelaide.

Premier, you said earlier that today's job cuts breach a deal that Holden had with the South Australian Government. What was that deal?

JAY WEATHERILL, SA PREMIER: Well, in return for our investment, there would be an investment by Holden, but there'd also be a commitment to minimum employment levels at Holden in the Elizabeth plant. And that's been breached by the announcement that's been made today.

LEIGH SALES: And what were the minimum employment levels meant to be?

JAY WEATHERILL: Well suffice to say that the 400 reduction announced today brings it below those levels. That's a matter that's been exchanged in documents. They remain confidential to the parties, but it's a clear breach of what we entered into agreement about.

LEIGH SALES: Do you have any recourse to that?

JAY WEATHERILL: Well, I mean, the essential recourse is that we haven't yet paid our $50 million and so now we need to reflect upon what we've heard today. Obviously we want Holden to proceed with its billion-dollar investment. We - this was to secure the period between 2016 to 2022. That remains very important. This is an incredibly important employer in the north of South Australia. So we now have to reflect upon what this means for the whole agreement.

LEIGH SALES: Isn't the problem, though, that governments have propped up the car industry for so long that if you now were to withdraw that $50 million off the table, you're gonna see mass job losses in South Australia?

JAY WEATHERILL: Well our agreement was a bit more sophisticated than that. It involved a transition from the existing arrangements to a new set of arrangements. We were working with Holden to work with our components suppliers so that they can be first-class suppliers so they can fit into Holden's global supply chain. We also wanted Holden at the Elizabeth plant to be part of the global supply chain, not just supplying for a domestic market because we knew that there was no future in that. So, there are a range of important undertakings that Holden has given us in this agreement which are about transitioning essentially a South Australian industry base which has been old manufacturing into an advanced manufacturing sector and we know that's the future for manufacturing in South Australia, indeed in this nation.

LEIGH SALES: What sort of notice did you get that Holden was reneging on the deal as you see it?

JAY WEATHERILL: Not much.

LEIGH SALES: Well what exactly?

JAY WEATHERILL: Well, this morning.

LEIGH SALES: And how did you actually find out? Who told you you that this was coming?

JAY WEATHERILL: Well, I was advised that Mark Devereux wanted to speak with me this morning and I spoke with him and he outlined the nature of the announcement that he was going to make a few hours later to the workers at Holden. And obviously there are a lot of workers here in South Australia that went home to their families tonight, about 400 of them, and they'll face a very uncertain future. The 1st August is the date when the company wants to achieve these redundancies and many of them'll be feeling very insecure and on their behalf I'm very upset.

LEIGH SALES: Had you had any dealings with Holden recently where you feel that perhaps you could've been given a little bit of advance notice that this was coming?

JAY WEATHERILL: Well, yes. I mean, we were out there celebrating the launch of the the new vehicle that they were putting out into the market and there was lots of back slapping and good times were had by all and there was no mention of such a dramatic decision that was about to be announced, and I think that's wrong.

LEIGH SALES: You talked before about old manufacturing versus advanced manufacturing, that you want to see South Australia go down that route. Isn't the issue though we've got this very high Australian dollar; other countries can do more manufacturing more cheaply? We just cannot compete in manufacturing.

JAY WEATHERILL: No, that's not the experience. I mean, some countries around the world that have very high Australian dollars, very high rates of pay, so high skill levels, high rates of pay, are still able to have successful manufacturing sectors. And that's because they go up the value chain. They don't seek to compete merely on the basis of cost. They seek to compete on the basis of value. And we're doing that here. I mean, in South Australia we have a car components sector which is world-class. We supply a very large proportion of the world's mirrors with a technology that was created here in the University of South Australia, a surface coating technology which has now been taken up and used internationally.

So, there are ways in which by going up the value chain, by using technology, by resting on the skills of our workforce and the sophistication of our tertiary institutions that we can actually have an advanced manufacturing future, but it's a transition. It's very hard to actually build a manufacturing sector if you lose one overnight. And that's why we were working to transition with Holden in this way. And that's why it's so disappointing that we feel like we've been let down by a decision of this sort.

LEIGH SALES: Well Holden says that conditions have changed quite quickly. So, for example, that competitors' currencies have fallen quite dramatically against the Australian dollar and so that this decision has within forced by factors outside Holden's control. What do you say to that?

JAY WEATHERILL: Well I have no reason to doubt that, but I'm talking about our relationship - the South Australian Government's relationship with General Motors Holden and the agreement I struck with the chief executive of General Motors Holden and the undertakings that were provided to us and our expectations as a state that has actually supported this company for decades and decades. And I think we deserve better. There are a range of important undertakings in that agreement that I want to ensure are delivered to South Australians and now we need to have some serious discussions with the company.